Ola, Flipkart warm up for credit card play

Both banks and credit card partners can leverage their respective databases to isolate customers' spending patterns.

Apr 30, 2019 by The Passage Team

Ride-hailing platform Ola and online marketplace Flipkart are prepping themselves to launch credit card services in partnership with large banks, Economic Times reported citing multiple sources in the know.

Ola would start trials next week. It plans to roll out one million cards in the first year in tie-up with The State Bank of India. “Ola is betting big on credit-based payment as next frontier of digital payments," ET quoted a source.

A person directly aware of the company’s plan said, “the broader strategy is to offer wider services aligned with mobility and beyond, with a digital first onboarding experience, real-time expense management and instant rewards system linked to spends”.

The firm launched Ola Money in 2015. Nitin Gupta was appointed as the CEO of Ola Money in December 2017.

Inarguably, credit space has now become the place to be. The big league players in India include HDFC Bank, State Bank of India, ICICI Bank, Axis Bank and Citibank. As of February 2019, a total of 46.1 million credit cards are in circulation.

“I am already saying people will move from UPI to credit. It is not happening today, but it will happen in two to three years' time. That's where you have to take a bet,” Cred founder Kunal Shah told The Passage.

A top executive of Flipkart told ET that the company is likely to launch the credit card in partnership with Axis Bank or HDFC Bank soon. “These data points may be shared with banks for better credit scoring,” the executive said.

Credit card partnerships offer a treasure trove of customer data to banks at cheap costs. Such tie-ups help both parties to leverage their respective databases to isolate customers'spending patterns.

"Such partnerships will allow internet companies to enrich behavioural data and drive adoption of their proprietary payment rails. Once they know where their most valuable customers are going, they can in turn target better and also discover future brand partnerships," Vivek Belgavi at PwC, told ET.

Amazon Pay launched a co-branded credit card in collaboration with ICICI in October 2018 offering customers rewards and benefits on the Amazon India ecosystem.

If Shah is to be believed, credit is the only real opportunity in the fintech space. According to him, all players would eventually move into credit.

“Paytm has launched Paytm Postpaid. I am sure Google and PhonePe will do something. Because people will say, if I don't use UPI I will use my credit balance. In two years, all the players are going to be involved in credit in some way or the other,” Shah said.

The Passage Team

The Passage is committed to creating in-depth content over technology industry across Asia with a focus on emerging startups in the technology, healthcare, education, food, tech, travel & mobility segments.